Reinventing for a digital revolution

Corporate world: the digital revolution is just beginning to get underwayCredit:
Getty

20 June 2016 • 10:30am

Rather than emulate start-ups, big companies need to unlock their own assets to compete in digital, says Chris Price.

We are living in a time of enormous change. Our forebears had the agricultural and the industrial revolutions. And we are now experiencing the digital revolution – but it is only just getting under way inside larger companies.

So far we have seen mainly small changes, with larger companies typically hiring a chief digital officer and developing e-commerce propositions.

Measuring digital success is something many companies are struggling to come to terms

But soon we will see these companies roll out digital tools more fully and adapt their culture to become more like start-ups.

“Over the past five to 10 years, digital has been seen very much as an add-on,” Narry Singh, managing director, growth and strategy, Accenture Digital, told a group of delegates at the recent Telegraph Digital Leaders Future of My Business roundtable in association with Accenture Digital.

However, in what Mr Singh refers to as the start of “chapter two”, businesses will begin to develop “no-regret capabilities”.

These include new types of metrics for measuring digital success that do not necessarily reflect a return on investment (ROI), at least in the short term. “Distribution and engagement in digital businesses are much harder problems than monetisation,” said Mr Singh.

Indeed, measuring digital success is something with which many companies are struggling to come to terms, reckons Teté Soto, general manager online and multichannel at Telefónica UK.

She believes part of the problem is that many larger businesses simply do not understand digital. “In all the companies I’ve worked in, there’s been a board that talks a very good game about digital. But when you dig deeper into what they understand, it’s not very much.”

Clearly what is required within many companies is also a cultural shift. Mr Singh says: “That’s hard because many large businesses we work with have been designed to resist change.” And even those big companies that are prepared to change often do so very slowly.

Smaller digital start-ups are usually more agile and can adapt quickly. One company that knows more than most about working with larger organisations is Royal Philips.

A provider of digital healthcare solutions for preventing and managing long-term illnesses, it works with a range of healthcare providers across different regions.

Alberto Prado, its vice-president head of digital accelerator, says: “It’s not their willingness but their ability to change that isn’t great. They’re often not incentivised to change and are very slow. Part of our role is to engage with them and paint a vision of what the future of health could be, and how to support them.”

All the delegates at the roundtable agreed that recruiting good people to larger businesses remains a big problem.

Mr Singh says: “The elephant in the room is that most digitally savvy people want to join companies where they feel they can make an immediate difference.”

He cited a recent Accenture survey that suggested only 14 per cent of US 2016 graduates want to work for large companies – a number that is declining. “We think that’s going to be one of the most fundamental challenges over the next 10 years.”

So how do larger businesses find the best talent? Many companies have had to turn to contractors rather than staff for digital roles.

You are four times more likely to make more money from a large company than a start-up

Hannah Dent, head of digital strategy, Virgin Media, says: “With the lack of supply of specialist skill sets in digital, we’ve had to rely on expensive contractors.”

Part of the issue is that digital start-ups are often seen as more attractive and less bureaucratic than established companies; entrepreneurs believe they can make more money by staying outside large organisations.

It is a misguided belief, according to Accenture. Its latest figures show that you are four times more likely to make more money from a large company than a start-up.

“Millennials want to work for companies that offer a more intimate, personalised career path,” Mr Singh says. “Shiny new start-ups are certainly attractive in that respect. But as large organisations pivot to chapter two of digital, the opportunities they unlock will be equally, if not more, attractive.”

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